Market Watch: June 21
Big Picture
Fed Holds Steady, But Rate Cuts Expected Later This Year
The Federal Reserve held its benchmark interest rate steady on Wednesday but signaled rate cuts in the months ahead were a real possibility if the economic outlook weakens. U.S. inflation this year has held below the Fed’s 2% target, with prices up 1.6% in April (excluding food and energy). Additionally, hiring slowed in May, with the three-month monthly payroll growth off nearly 100,000 from January; while the unemployment rate held steady at 3.6% in May, a 49-year low. U.S. stocks rose to session highs after the decision. The Dow, which was up 6.9% this month on Wednesday, is on track for its best June in nearly nine decades. The S&P 500 has rallied 6.2% this month and hit a record close Thursday.
On Tuesday, major global indexes surged after European Central Bank President Mario Draghi signaled the ECB could cut rates and expand its bond-buying program to shore up eurozone inflation. Also adding to investor optimism, President Trump and China’s Xi Jinping agreed to meet at the G20 summit in Japan, sparking hopes for a trade truce and driving U.S. indexes to near-record highs.